March 11, 2011

Making private entrepreneurs billionaires by grabbing public land

I have often said that we are a strange economy wherein the number of billionaires is increasing by the day, but we hardly have any worthwhile billion dollar global product. And this weird, inexplicable phenomenon – where billions are being made without having commensurate global products – is only prevalent in India. One wonders how these billionaires manage to make their billions without a supporting product? Well, of all the inexplicable means that are being adopted, one of the most fashionable has been the act of blatant land grabbing! In fact, land acquisition in India has been always the most ignored legislation, and obviously for understandable reasons! Not even three months have passed and 2011 has already seen its share of illegal transactions of land meant for public purposes. Among these innumerable and mostly untraceable public land deals, there are three deals that caught my fancy mostly due to the sheer nature of the deals! The first one being that of the Tamil Nadu government – in January this year, they attempted to divert a stretch of land reserved for slum redevelopment and low-income housing to private players (against the Tamil Nadu Slum Areas (Improvement and Clearance) Act of 1971), a move which could have made nearly 7,000 families homeless! In January again, it was found out how Maharashtra and Housing Area Development Authority (MHADA) sold a 3-acre plot worth Rs 300 crore to a private developer; the plot had been originally allotted for developing 900 flats for low and middle-income groups. Similarly, in February 2011, bodies like HUDA and HSIIDC acquired almost 350 acres of panchayat land in Wazirabad village under the reasoning of providing public utilities and then later sold it to a private player for Rs 1,700 crores for residential and commercial development.

From politicians to bureaucrats to industrialists, all eye various developmental projects to grab a share of prime land. And the process is simplified further as the law governing land purchases in India is over 110 years old (the Land Acquisition Act dates back to 1894). In spite of this law having been amended a few times, the amendments have only strengthened the government’s land grabbing powers. As per the act, the government – both at the state and at the Centre – is absolutely free to acquire any land anywhere in India for public purposes. This means that the government has all the rights to acquire private land even without the consent of the land owners, if the acquisition is done for “public purpose.” In most of such acquisitions, the land owners manage to get token money as compensation, which is far below the market price! Most of the times, the land acquired by the government is developed under the Public-Private-Partnership (PPP) model where, eventually, the private component in this partnership corners every benefit, caring two hoots about any public convenience or need! Take for instance the Uttar Pradesh government’s initiatives of building the Greater Noida expressway, where the initial owners – the farmers – were paid as less as Rs 50 per square meter for an area which is being sold currently for a minimum of Rs 1500 per square meter – a staggering 3000 per cent markup. Similar have been the cases with the much-touted Vedanta and Posco! A few weeks back, the Supreme Court had to itself direct the Haryana state government to evict encroachers from the land belonging to village communities; much of this land was unofficially transferred to private players for commercial use. In the past, the courts have had to intervene in many such matters, especially in Gurgaon, where panchayat land meant for public utilities was sold and leased out to private players. Among all these various cases, the one which needs a special mention is the one that got exposed in November 2010.The High Court of Punjab and Haryana criticized the Haryana government for acquiring 19 acres of panchayat land in Nathupur and selling the land to DLF – consequently, making a profit of Rs 47 crore. In 2009, BMC redirected acres of land meant for public development to private players for commercial development – this primarily filled the coffers of civic officials. And the saga continues. It requires no audit or surveys to comprehend that a large sum of money is transacted, from all sides of the table under such arrangements.

Further, when it comes to development projects involving huge acres of land meant for public usage, most of the time, unprecedented amounts of money change hands within the unholy nexus of politicians and corporations. And it is this nexus and its misdeeds that are being forced down the throats of the poor, who are at the receiving end perpetually. What is worse is the bigger monster in the making – and that is with respect to realty prices, which defy any economic rationality! This is bound to happen again and again as more and more prime land is siphoned off to fewer hands, creating an all round artificial scarcity! What is even worse is the fact that all this happens in a country where there are around 80 million people who do not have a basic shelter for themselves – and for those who have them, almost a third do not own them!

After all, in a dysfunctional nation like India, it is always pelf before people! Land grabbing and making billions is just one of the means!

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8 comments:

mayihelpyouonline dot com said...

true but at the same time privatization issue is also a big issue. Govt. interested only making profit & profit by adopting policies of privatization of public sectors and making profits themselves which are been used by politicians raising MPLAD fund(5 crore)every year and other benefits in the name of run for govt. & bureaucrats using profits in the name of infrastructure for running & implementing policies of govt.

Priyambada said...

Respected Sir,
I very much appreciate, the way the things are depicted.
However, the system can be rectified, if you can suggest some workable suggestions to the government, in the form of an open letter.
Because, I have experienced the level of violence, exploitation, arising out of land acquisition.
Due to rapid industrialization and privatization, the problem is increasing day by day.
Hence, let’s think of something workable to address this issue.

Sanjay said...

Dear Arindam,

While I fully agree with your views, I want to know what is your view on Indian real estate? Do you agree with investment gurus like Yogesh Chabria ji, that it will correct and is in bubble mode in most parts of the country?

Thanks.

Harry Ralte said...

Hello, Arindam Sir,

Thanks for the factual and revealing article. The pointer that in the absence of billion dollar products, where are these Billionaires coming from, is fantastic.

Thanks,

Rock on!

Harry.

Kamlesh said...

Ya its true..

sanu said...

Sir,

Your article is very revealing and brings out some bitter facts of our economy. I read this article in THE HINDU cald 'India @ 61: an idea gone astray' which says "Gokul Singh Gond, of Druminia village, Madhya Pradesh, places his dead daughter Sohagvati on the back of his bicycle and pedals 10 km to the nearest district hospital for an autopsy. On the same day, cricketer Gautam Gambhir was auctioned for 2.1 million dollars for the fourth edition of IPL, the highest amount of money offered for the services of a cricketer in the history of the game. If there are two images that could capture the idea of India in the 62nd year of its republic, they are these. On the one hand, India is poised to send its business classes to take over the world when, on the other, it condemns vast sections of its citizens to subhuman existence." for more read :http://www.thehindu.com/arts/magazine/article1158683.ece

But sir isnt it high time we have quit playing the blame game with our politicians and our helpless & hopeless system and devised a method of our own to solve such issues. Instead of debating long hours on TV channels why cant we come up with solutions. There is a hell lot of the 'thinking population' out there but nonreactive. If on one side these so cald billionaire entrepreneurs can bend the law for their private gains; why cant we bend it for the best of the nation?

I am sure with the support of a person with such calibers and influence in media like you a solution can be devised and bring out a flurry of people to follow and awaken our young population.

nayana said...

s i agree with sanu.
sir, we need a platform where people both ends: leaders and supporters join hand to find a solution

Mandeep Dhami said...

Very much agree to Sanu's comments. People spend lot of time discussing the issues. There is no visible action on most of the issues discussed.
We need some strong leader who can lead people and fight/discuss on any one issue until the resolution is found.

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